sensitive the dow was. >> yes 37. >> tick by tick pz we were up 75 to 78 handles and then, bam, sold off. >> i think that's exactly what market and investors are telling you. they don't want a band-aid. there is more pressure coming. >> i feel you could be here for some hours. but for sue and myself, that more or less brings us to the end. sue? >> indeed it does. indeed it does, simon. don't miss our cnbc special report because they are probably going take it down to the last second in washington. america's economy held hostage hosted by ryan sullivan, kelly evans, tonight at 6:00 p.m. eastern time. that will does do it for "power lunch." thanks for joining us. have a good new year. "street signs" begins right now. >> the president speaking moments ago, saying that we are indeed close to a fiscal cliff deal.

the latest word is that they are negotiating over the exact amount where taxes will rise, 450, maybe 550, maybe in the middle at 500 but the president did throw a barb out there saying if the republicans think we are done with tax revenue and spending cut discussion, they have another thing coming. welcome to final "street signs" of 2012. and if things don't go well, maybe the final "street signs" ever. just kidding. just ten hours left in this year in washington and ten years until we fall off the fiscal cliff. can we get it done? >> working the phones day and night, let's goat john harwood in washington. lots and lots of headlines, fill us in. >> the latest mandy is that negotiations agreed on the middle class portion of the tax cuts. these are talks between biden

and mcconnell. what they agreed to is 39%, 39.6, rather, of individuals over $400,000 in income. married couples above $450,000. estate tax to 40% for estates over $5 million p.m. and rise in dividend rates. can they resolve the disagreement offer spending cuts? democrats are resisting. they want a longer perhaps one-year delay and president obama was trying to rally those disappointed democrats with remarks that he just made by citing gains that he had won in terms of energy and education tax breaks he supported in the past and vowing to seek more revenue later on when we get to the discussion of entitlement cuts or what republicans believe is safer ground.

saw some tweets saying he is trying to gum up the works. but there is the way the to and fro negotiation of president obama making sure his own troops are in line if he makes a deal. >> absolutely. talking to and fro, when president obama was speaking and saying a fiscal cliff deal was in sight, we saw the dow spike back above the 13,000 market pch pairing those gains a little bit as we speak. still below the 13k mark right now. we will watch this as we continue to get headlines. let's talk to aimian who is also falling a minute by minute changes. what is the latest in your camp? >> the deal john just outlined would be a relief here on capitol hill. i talked to congressman last night who were worried that negotiations would break down and the democratic senate would send over a hot potato bill. they thought they would be forced to be under a position of rejecting the bill, voting

against it or having tspeaker just sit on it and kill it completely. they did not want to be the last people in this debate to vote this thing down. now it looks like what will happen is they will get a bill at some point, perhaps later today or some evening that might be something a good solid group of republicans can co-eless around. it has been the big question throughout this. can the democrats and senate pass something the republicans will agree to. >> what is our timetable? what can we expect for the next ten hours or so? >> we don't know at this point. there are a couple of possibilities. one is they get it in the language, vote on it then see votes this afternoon on the senate side -- house side, rather. but it is getting late in the

day. another possibility is they punt this thing and go into tomorrow. do this while markets are closed tomorrow on new year's day. that is something i've heard scud el butt around. but stokes in control of the schedule here, simply don't flow when they get this deal and it makes it very difficult for tlem to know when to bring it to the floor. they don't know when it is or when it is coming. >> sounds like a late night and early morning. he was literally working the phones. this is an important part of the story here. remember this, if you haven't been following the fiscal cliff, take note. even if a deal gets done, taxes go up for many high income and likely big spending families. there is an economic impact either way. it is just perhaps the veseveri under question. >> when we talk about is the marginal propensity to consume.

what does that mean? for every dollar that you either have or don't have, how much of that will you spend or not spend? the thinking is as we raise taxes on wealthier people, that margin propensity goes down. in other words, they don't spend every dollar they have, they save a bit of it, because they have more of it. the economic point of view is to get rid the tax hikes on middle class. it goes down the the higher up you go it goes down further. you are right to say that in general, economists in 2013, brian, are looking for fiscal contraction. the federal government will be a drag on growth. no matter what happens, taxes go up on some folks then spending cuts in the budget control act and so far as you notice, brian, they haven't said anything about the $130 billion in automatic

spending cuts out there if they do a one for one trade. >> quantify it for us. in layman's terms here. how much of a drag on growth, steve? >> right now, if we did the full fiscal cliff, the full fiscal cliff monty, perhaps is the best way it put it, we get rid of more growth in the economy than in all of 2011. it would be a negative number, essentially, mandy. like 4.2% of gdp. we grew up 4% of 2011. a negative number. take away from that all things being equal. depending on what the private sector did. a negative for the economy. every dollar they don't do on the fiscal cliff, that's a dollar that does not come out of the economy. but i think it is probably reason to consider. talking about what brian was talking about at the top of the show here. 1%, maybe 1.5% drag on growth of anything decided from the fiscal

cliff anyway. >> and it depends on what you buy. i hear what you're saying with, steve and it is important to dive in. when you get a dollar you probably spend more than the dollar, right? they have shown that. that is the greatest multiplier. let's be clear on what that is on. necessities, food, clothing, which is needed. and on taxes, and there is not a lot of sympathy, but if you are a boat maker, high-end home builder, anything to do with that side of the economy, whether or not there is sympathy or not, you will get pinched. boat makers, while maybe not getting sympathy, do employ people. >> i don't disagree. there is effect at upper end. there is some reduction in spending coming from higher taxes. the question is whether what is the overall effect and the

question is what is the goal here, brian? why are we going through this exercise to begin with. >> force equality of income. if you can't raise incomes, then bring the top down to where the gap is narrow. >> redistribute that income to order to give people a leg up and eventually become even wealthy on their own or not become dependent on the state. that the goal that would you hope they would aim for here. but i want to point out that nobody is that concerned from an economics point of view with spending this year. all of the spending issues are in outlying years. there is no sense that deficit will hammer us right now. >> i have blajerred on too much. my fault. thank you very much sfls let's hit on as many as we can. jimmy p. joining us. and former governor ed rendell.

i think steve brought up an important point, governor, which is this, what do you believe is the ultimate goal. adding 50 $60 bucks to benefits will help them live a more comfortable life. will it help the growth goals of the united states? >> i think the greater growth goals can only be accomplished -- look, there isn't going to do anything to get our debt under control. we we have to go back to the drawing board to deal with entitlement reform, military spending cuts and revenue. it is reported this produces 600 billion in revenue, that's not nearly enough. we have to go back tlt drawing board an and make tough decisions. only taking care of the debt will causey think the chain reaction that will cause markes to the explode. economy to grow bp that's more important than any of the little niches you are talking about. >> when will that time kuk? when will we have to go back to

the dprrawing board, sir? >> i think in the next couple of months. you have the resolution and the debt ceiling. those things are crucial. and someone has to get serious about real reform. real change. real spending cuts and real revenue increases. we talk about, we are going to reform taxes and change some deductions and maybe change loop holes but no one had the cuts to put one out on the table. >> sounds like with you are not thrilled with what we have so far. jimmy p., what do you think is being achieved here? >> one thing, there is -- we have forgotten about it that we are, as least as the president outlined it and john harwood outlined it, there are increasing investment taxes next year by 60%. 15 to 24 healthcare tax. that is a huge increase. one other thing from the president's speech, the fiscal

cliff will end. now the super cliff in february and march. looks like a huge battle of the sequester. republicans want different spending cuts and debt ceiling on top of it. get ready for the super cliff? >> so you are saying today is just a band-aid. >> listen, the battle will be more fervent in the spring. it doesn't sound like they will delay it. that's an even bigger battle, i think. >> i think governor greg man u, some say he is partisan on the right, he had an op ad over the weekend. if we want to be a nation that gives people unlimited healthcare and social security no matter what you pay in, taxes have to go up on everybody. do you agree? >> answerly.

tax absolutely. we can give reasonable benefits, controlled, smart spending with, do all those things and keep tax cuts at a reasonable rate. >> with the average single income household. let's say the man works, wife doesn't, or vice versa. it is $6 used versus every $1 paid in. 6-1. can clearly unsustainable. >> we need far more fundamental reform. what the governor expects to avoid massive tax increases. >> who's got the guts to do that? feels as if kufrnt congrecurren do not, jimmy. >> the president trashed it in the campaign. i think that's the medicare reform we need.

does that mean revenue is at 18% of gdp for infinite? i don't know about that. >> i would like to ask you, governor, what did you think of what obama was saying? do you feel he moved the ball forward or backwards? >> i think the deal will go down regardless because the embarrassment would be so great for not going it. >> who in particular do you think is causing that embarrassment? >> i think washington, d.c. everyone. rs everyone. i think what joe mentioned yesterday is exactly right. people are looking at washington and seeing a dysfunctional city, dysfunctional government and we've got to prove them different and we've got, i think, we've got two to three months to really do something significant. you know, the campaign to fix the debt, which is bipartisan, greg and bloomberg and i are co-claire, we've been calling for them to do something big. they had seven weeks to do something big, and they didn't. they kicked the can down the road. >> they add decade to do

something big. jimmy, listen, we are heading into the nur yeanew year, it is time for forgiveness. i will defend congress for a second. i was thinking about this last night, right? they are in an impossible tossing. if they say, i'm sorry, you won't get everything promised. period. next election they are go gone because someone will step up and say, sure, i will give you everything. i don't know how i'm going to pay for it. so i feel a little bad for congress. happy new year. >> i don't believe that's right. >> i do not believe that's true. i believe they need a logical plan that said, listen, our number one choice is not to raise taxes. first we will get spending down. then pro growth tax reform to create more revenue. then if we have to, last choice is to raise the tax burden. >> governor, on the point jie bryan just made? >> i think the american people

are smarter than what you just said, brian. >> i hope. >> if we act together, republicans an democrats together, i think they'll be a surprisingly small price it pay at the battle box. >> i hope you're right. governor rendell, jimmy p., always good to have you on our show. >> thanks you. >> in case you are haven't noticed, we are following the fiscal cliff down to the wire. no early partying for us. i will be hosting a party with kelly evans. a big night with a lot of developments. please tune in. >> next, fiscal cliff will have a major effect on america's manufacturers. we will talk to two ceos, nation's backbone is bracing for this impact. >> later on, there were big stock winners this year. but should you buy those studs

or take a flyer and go with the duds? we will debate it coming up. i wasn't pointing alt at you. [ male announcer ] at scottrade, you won't just find us online, you'll also find us in person, with dedicated support teams at over 500 branches nationwide. so when you call or visit, you can ask for a name you know. because personal service starts with a real person. [ rodger ] at scottrade, seven dollar trades are just the start. our support teams are nearby, ready to help. it's no wonder so many investors are saying...

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now we do go over the cliff and let's hope we get a deal for the last minute that we will stop that from happening. the impact will be felt in just about every aspect of the u.s. economy, especially u.s. manufacturing. let's bring it n president of power systems. also david watham.

they make a wide range of manufacturing product from packaging to containers. both of you, great to have you with us today. david, to you first of all. i don't know if you've been listening to the tv or radio or hearing about the headlines or the contours of the deal arising right now. what does it mean for your business? >> first off, i'm optimistic because it is a step in the right direction. all it is, is a step. big stuff to work on. >> that said and i talk a lot to counter parts, we are all operating in this mode we are in flat economies and a few bright spots around and you jump on those and anything with the solution, is pretty short term and there is a lot bigger stuff to do before we can grow the u.s. i'm a big optimist on the u.s. but we have work to do. >> david, in the lead up to this fiscal cliff deadline, a lot of ceos we have spoken to have said, just the uncertainty that the tax rates will be -- they

don't know what certain other thing will be. so they put their hiring plans on hold. is that case for you? if we do get a deal, will it unleash capital spending and hiring? >> i am a little different than some of those. i've got friends that would say exactly that. i happen it think in times of stress, or when you pick a few bright spots and winners and double up on them. you can k see it in the growth rates and see it in the capital spending rates and hiring, that said, you have to be precise and pull the plug fast and we are all in that mode. but i do think there are bright spots. you have to dig them out and jump on them. >> as opposed to the story of what will happen in taxes go up, how about this? did your business boom when tax rates went down? >> were you talking to me, sir? >> larry, yes. >> they sure did. that's a key component for

business. we've add real strong three or four years with 30 to 40% growth and it is exciting to sit back and strategically plan how to overcome the obstacles in the -- in business. what's frustrating is to see what is going on in washington because if they just get out of the way, we can do some things and create jobs. >> what would they do, larry? if you were running congress for a day, as a successful guy wh, t would be job one? >> well i would bring in people smarter than me, like warren buffe buffett. i would put them in a room and say, what would you do? you're the best there is, give us advice, what do you think we ought to do? then make sure politicians listen to them. >> same thing to you, david. if there is one thing that you

could have done in congress, that is pro your business, what would it be? >> rule one for me is moratorium on blaming at each other and gripe at each other even get serious about moving forward. same as you just heard. the real issue is growing the total pie. and we can do that. it is tax rate driven. i agree. some understanding of what is coming at us. we are all raring to go and know what what to do. we are getting squeezed some to say, maybe they are growing faster, let's jump on that. we opened two plants in brazil and two in the u.s. that ratio cleared when we see more in the u.s. >> larry, bottom line, will 2013 be a better year economically than 2012? >> i want it to be. i just don't know what they are

going to do in washington. again, if they will get out of the way and let small business to what they do best, i think we can have a heck of a year. >> okay, larry, david, thank you for giving us the view from the ground, if you like. thanks for joining us on cnbc. why some doctors are ready to pull the plug if we go over the cliff. on gasoline. i am probably going to the gas station about once a month. last time i was at a gas station was about...i would say... two months ago. i very rarely put gas in my chevy volt. i go to the gas station such a small amount that i forget how to put gas in my car. [ male announcer ] and it's not just these owners giving the volt high praise. volt received the j.d. power and associates appeal award two years in a row. ♪

like the rest of us, physician face a tax hike in the new year if no deal is reached tonight. at the same time, doctores who treat the 47 million medicare patients face a big pay cut with reimbursement rates set it fall off on new year's day. you are looking at the doc's fix cliff, that's a hard one to say. >> yeah, the doc's fix cliff. now just 9 1/2 hours away from what they call crippling medicare cuts. the sequester cuts mean 2% reduction for medicare. on top of that, doctors face 27% rate cut because of medicare formula all sides say is broken. sustainable growth rate formula triggers doctor reimbursement

cuts. for nine years it has done that and congress passed doc fix funding to keep rates from being can cut. this year the doc fix is hostage to the fiscal deadlock. without a fix, one physician group calculates that most family practices will see a 27 $27,000 decrease in terms of what they make this year. and the typical three-doctor practice will lose about $80,000. centers for medicare and medicaid notify doctors of a window of about two weeks of that area in orange. reimbursement cuts start at midnight. none the less it takes about two weeks before they pay the very first claims. so before that, they won't cut the payments. meantime, bit 1 17by the 11th, e doctors that will give them what terms to provide and pay. that keeps doctors very much in the dark because even if they

delay patient payments that means that doctors still have to try it maintain their costs. >> it looks like physician will get 27% cut in reimbursement for medicare. which for some means they are losing money on patients which suggests to me that at least some of them would stop taking medicare patients. >> and that's not something we need when you've got 10,000 baby boomers eligible for medicare everyday as they age in. putting the price tag around $300 billion, but guys that's a big chunk of change for this congress to come up with. read more on the doc fix on cnbc.com. >> thank you very much. i challenge you, brian, to say that, doc fix cliff. >> doc fix cliff. >> yeah, whatever. >> it is a tough one. coming up next, an update on the iffis cal cliff. find out why we are standing

right now. >> and will 2013 be an even better year for the housing market? we will fire up the crystal ball and see where housing may take us. that's coming up with the doc fix can cliff. >> now you're just showing off. >> yes.

we with like to introduce to you street talk with our stock number one being cal-maine foods, big egg supplier, in the tank. >> laying an egg in the market today. >> egg on their face today. >> negative outweighed benefits from selling higher priced eggs. gross margin. you name it, a tough time for america's biggest egg company. >> yeah. what about magelin health services? >> they are tanking after one of their biggest customers decided not to renew their con trablgt. contract /* /- i know it doesn't sound like a lot, but they won't renew their contract with magellan on that news.

>> there is a latest twist in this, a good one, bristol meyers squib and pfizer. >> the clot drug we have told you about, with approvals in japan and other countries for these drugs, they have a lot riding on eliquis. >> stellar for the past quarter of s&p and moving higher again today. >> yeah. over the past quarter, you're exactly right. you have seen criticism because the news is that the ceo has a million underpay. stock has done very well as mandy noted. a pay cut this year, so going back next year. look at the stock chart, still well off highs. some people say, why does he deserve any kind of a raise? i don't know. you can decide yourself. >> apple is moving 209 upside.

this is yet another twist in the tale of this ongoing patent dispute. >> yeah. stock is up 4% today. samsung with claims against samsung. samsung agreed ton sell the galaxy siii mini in the united states. apple claims it isvilleable through amazon but will drop claims if samsung guarantees the phone won't be sold here. >> is there ever a more epic battle. >> apple versus samsung, a pimi series. >> i went to law school while i was working and people said, why are you going to law school when have you a career? i said, a, it won't be long, knowing me. >> 9 1/2 hours before the fiscal fiasco. john has breaking news at the white house. what do you have, john?

>> i have news just confirmed bay white house official. there is two ways to raise money from people in income. one is by raising rates. we talk about the clinton rate of 39.6 being $400,000 for individuals and 450,000 for couples. but there is going to be a letter right rait under it tentative deal, still emerging, for the phase out of deductions and credits. that phase-out would begin at incomes of $250,000 for individuals and $300,000 for couples. that means that the president can say that he had campaigned on raising taxes over incomes of 250,000 in this instance for this purpose, of winding down deductions and credits, he can say that. now again, this doesn't get into the revenue goals that he sought initially in the deal but a way for him it signal to democrats that in fact i'm trying to get

revenue down at lower income thresholds and he said a few minutes ago he would seek more revenue when the entitlement discussion resumes in earnest in federal deductions, guys. >> do we have an idea of what deductions may be phased out. mortgage interest? charitable? are these itemized? >> i think a whole range of deductions. i don't have a detailed list. it is very technical in how the phase-outs are referred to by acronymes with the name of a lawmaker who authored the provision. there are ways in which they came about during the 1990s when they were closing the budget gap and raising more revenue ways without touching the rate, just ensure that people with high income lekss don't have the same deductions that people with low income levels do. this doesn't even get to the president's idea of reducing the

rate at which you can claim dedungss to 28%. it is about the phase-out. >> if part of that is housing mortgage interest then watch the realtors squirm as well. thank you for watching that news for us. >> let's bring in jennifer, blogger pr the washington post and hey jennifer before we get into congress and mer can's hatred of congress, what do you make of john harwood's news? do you think people will take fewer and fewer dedungss at the high end? >> they certainly aren't practicing the art of tax reform are they, with these may. ed rates. i think this is damage con froel for the president. i think this will not please a lot of republicans and it shouldn't please a lot of blue state democrats. chuck schumer and kirstin gill

brandt will have a lot of deductions for the states. which is something they might not want. >> you have been very, very critical of congress, right? let me bring up some words you used. and you're sticking with that or are you at least a little bit encouraged by compromises that are coming to the table today? >> i think there is a the dysfunction with the white house. you know the president had to artificially insert himself because he is not in the mix. firsthanding the ball off to harry reid. when harry reid couldn't get anywhere. he handed it off to joe biden. i think this is not a congress that distinguished itself. in particular, the united states senate which hasn't passed a budge net how many years now? so i think the house at least has done its job. it has passed an alternative for example for the sequester cuts. it did come up with a plan to avert the tax increases across the brd? the senate has really done

nothing. and it is amazing to me that people would ask for their jobs back. when they haven't been able to do their jobs in any meaningful sense in the last few years. >> jennifer, listen. i'm in a charitable mood. i've been defending congress. these people were elect ped sop clearly somebody believes they need to elect these rigid dog mattic individuals that won't budge. >> i don't mind so much that they are dogmatic. i would like for them to put forth the foe seerable course. what does harry reid believe? what does chuck schumer believe? let them put something on the table, go through a congress and works things out. they have been spared even voting on splg. >> no one wants to get up in front of the public and say, i'm taking this. >> that's too wad. they are elected to do a job.

and during election the president announced wanting to do certain things. part of being an elected official is being forced to say what you are for and what with you are against. if they can't do that, then go back it wherever they came from and find another line ever work. >> wonder if it will get worse before it gets better. thank you for joining us today. the washington post's jennifer rubin. this is wall street's fear gate. i believe it has seen the steepest drop today since june. down 14%. back below the 20 mark. you can see the dow is slightly about 13,000 again. i think the nasdaq is back -- there you go, back at 3,000 exactly. it feels as if the mark set feeling they are putting faith in a deal getting done before the deadline cracks over our heads. >> what is the "street signs" motto? >> hopium. >> no. >> oh, everything's fine.

>> right. and the vix is saying. >> everything's fine. >>. we have other mottos. >> most not fit for a family show. >> what will 2013 bring for housing and poor people of pairs? we will explain what that is when "street signs" returns.

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coming up on closing bell at the top of the hour, the very last trading hour of 2012. anything is possible today. we are watching the market moves and helping you get set for a prosperous 2013. and of course the latest from capitol hill. no deal yet, but we are close, apparently, to getting something as we approach the midnight deadline. up to the second details from california coming up here. then a while year for technology. if our experts are right, 2013 will be even more surprising. if you're an investor you cannot afford to miss their predictions coming up. all that and more when mandy and i see you at the top of the hour. dare i say this could be the most important trading hour of the year, mandy? >> i think you can dare to. thank you, bill. see you in a few minutes. the city's oldest bakery not

staying open for one day more. while the 202-year-old shop is suffering from failing real estate prices. the landlord doubled the rent and says basically he is shutting down because he cannot stay profitable. kind of sad. all those people who have enjoyed his baguette for 43 years. >> maybe he can go to belgium. >> what can we expect for housing in 2013? let us bring in president of team investments. all right, tanya, what are you seeing how the there? give us your forecast. >> i would like to say we are going to see a lot of short sales but if the fiscal cliff is not averted, we will see mortgage rates stay low. they can't afford to raise rates because, here is a great example. in 1987, $170,000 house, the payment is more than $270,000 house with 5% down today.

so they can't afford to raise the mortgages if we go over the cliff. the other thing is people won't be able to short sale because that will be taxable income. so it would be better for them to forclose. that really hurts the banks. it hurts everyone. hurts the homeowner. but people have to do that to avoid that tax consequence. so those are really big things that the fiscal cliff will hurt or help depending on what they do. >> what if we don't go over the fiscal cliff? what if we get the last minute deal, as we stand right now, what happens to housing then? >> absolutely. so if we do get that deal and short sales are able to continue the way that they have, the banks are even seeing a profitable situation with short saling. we are going to see a lot of short sales in 2013. we are going to see rates stay low for the first half of 2013. but they are going to have to

let people be able to get that type of rate by raising the rate and reducing what it takes to get that type of loan in the second half of 2013. and in all honesty, sorry, housing is really a bright spot in the economy right now. so i think that they will dot right thing and let this continue to see gradual gains like they have. >> tanya, dare i say happy new year? thank you very much. >> happy new year. >> take care. >> all right, stocks for the new year. coming up, do you buy the wirwif 2012 or hope the losers rebound? we will debate it. >> and fiscal cliff be damned and have formed lots of crowds there as can you see on the screen, for the big ball drop. p it is about 36 degrees out there. i've said it many, many times, nothing at all would entice me to stand there for the ball drop. >> you wouldn't be able to see. >> and there are no bathrooms. it is cold and there are no

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but don't just listen to me. listen to these happy progressive customers. i plugged in snapshot, and 30 days later, i was saving big on car insurance. with snapshot, i knew what i could save before i switched to progressive. the better i drive, the more i save. i wish our company had something this cool. you're not filming this, are you? aw! camera shy. snapshot from progressive. mitch mcconnell speaking on the senate floor. let's listen in. >> president said quote for now our most immediate priority is to stop taxes priority is to stop taxes going up for middle class families starting tomorrow, end quote. i agree. he suggested that action on the sequester is something we

continue to work on in the coming months. so i agree. let's pass the tax relief portion now. let's take what's been agreed to and get moving. let me say this was not easy to get to. i mean, the vice president and i last spoke about -- yesterday about 12:45 this morning and then again at 6:30 this morning then multiple times during the day this morning. this has been clearly a good faith negotiation. we all want to protect taxpayers. and we can get it done now. right now. so let me be clear. we'll continue to work on finding smarter ways to cut spending, but let's not let that hold up protecting americans from the tax hike that will take place in about ten hours. ten hours from now. we can do this. we must do this.

i want my colleagues to know that we'll keep everybody updated as we continue to try to wrap this up. i yield the floor. >> senator mitch mcconnell speaking on the senate floor. what he said was a big deal. there's your markets the dow jones industrial average continuing to gain. it is up 103 points right now. mcconnell saying quote, they are very, very close to a deal and perhaps more important for the market that they have reached an agreement on all of the tax issues. once again, the senate minority leader saying there is an agreement in the senate on all tax issues. that has been a sticking point, and it means that they have come to an agreement on a number whether it's $450,000 a year, $500,000 whatever it is defined as rich and who will pay higher

taxes. they are close. and the dow up 100 points on that and has been gaining the last couple minutes or so. all right. let's talk more about this. brent willsy. all right, jim, got about what? nine hours and change until the end of the year. you heard mcconnell. do you believe we're getting a deal sfl. >> i do believe we're getting a deal. i've believed that the whole time. i'm surprised it coming this early. we're not in the eleventh hour yet. it seems they'd want to occupy center stage for the rest of the day. i always thought we were getting a deal or a deal coming within the next couple days with hints today that that's what's going to happen. i think the market believes what i believe. in a couple weeks this will be history. >> brent, do you agree with that? >> it's funny. jim and i do agree on this and i've been saying this for the past month. negotiations 101, you're not going to make a deal until the

last minute. that's the best negotiations you can do. i've been saying this on my radio show and public and so forth. now we're starting to hear more positive news. i think that's why the markets haven't gone down much because they agree as well. >> okay, brent. then let's assume -- and i'm going to go with the framework of what we heard as the deal. again, i'm not saying this is the deal. let's say the latest framework is what we get. taxes go up above 450, maybe we see an increase in capital gains taxes and investment income to 20% or 25%. not ordinary income rates. what damage, if any, would that do to the markets and the economy? or would we be fine? >> i think we'll be fine and do very well, because -- and you guys have been doing a great job covering with ceos and so forth saying we just want to deal. now to get this deal, now businesses can decide what they want to do. consumers will start consuming again. i think 2013, i think it's going

to be a very good year. we'll have good gains because now we have things we can deal with it, some things we'll like, some things we won't. but we know where we stand. >> jim, the money's coming from somewhere. now a family paying another $2,000 a month in taxes for a rich family. they can swing it but it's going to come from somewhere. do you agree the economy will be okay? >> we have to remember that raising the taxes and capital gains and dividends is a bad idea. we don't want to raise taxes on investment. we want to cut it -- >> but it's coming. let's assume it happens. >> no, that's fine. that being said, this is very minor. this could have been much, much worse what we thought could have happened a month ago, a month and a half ago. i think we're going to take this in stride. this is not that much of a negative. >> that's interesting. then the democrats should be screaming, jim. because if the money -- the money before didn't make a dent in the deficit, this deal while

good for america may not -- is going to by default make less of an impact. >> all they really wanted to do was make sure they stuck to their campaign promise they were going to raise tax on the upper class. and that's fine. there's no meaningful reduction to the deficit until we deal with medicare and defense. >> we've got to go. happy new year, gentlemen. >> you too. >> let's bring in eamon now. mitch mcconnell surprising at least us coming out saying that. looks like they're close to a deal. good news? >> absolutely good news. definitely an indication that mitch mcconnell thinks as he said they are very, very close. now, interesting about mcconnell's comments. he's saying he thinks they are very close or graed on the tax piece of this deal. and maybe they should take that and come back for the spending piece later. that's going to be an interesting decoupling of what we thought was going to be a one-stop shop kind of a deal

here where we go both on spending and taxes in the same negotiations. now we're going to see maybe -- >> eamon, i got to jump in on you. we got john harwood as well. you broke the news about the phase out. it sounds like mcconnell saying the tax part is settled. sounds like the last fight is going to be the news that you broke. >> yes. well, i think what mitch mcconnell is trying to do is force the democrats' hand on the sequester. if you don't get an agreement on the sequester, then the automatic spending cuts happen. republicans simply don't want to give democrats a pass on that. democrats are standing firm 37. >> john and eamon, thank you very much. i know we're going to hear more from washington, d.c. we've got "closing bell" next. we'll be right back. i don't spend money on gasoline. i am probably going to the gas station about once a month. last time i was at a gas station was about...i would say... two months ago. i very rarely put gas in my chevy volt.

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